Question ID
2015_2224
Legal act
Regulation (EU) No 575/2013 (CRR)
Topic
Model validation
Article
99
COM Delegated or Implementing Acts/RTS/ITS/GLs/Recommendations
Regulation (EU) No 529/2014 - RTS on materiality of extensions and changes in the advanced approaches (IRB and AMA)
Article/Paragraph
Annex 1, Part 1, Section 1, Point 1 c)
Type of submitter
Credit institution
Subject matter
Extending the range of application system.
Question

What is practically meant by 'additional exposures related to the lending decision of a third party to the group'?

Background on the question

According to RTS 529/2014, extending the range of the application system is a material change and needs the approval of competent authorities. Among other cases that are mentioned in RTS, extending the appllication to additional exposures that are subject of a lending decision of a third party is mentioned to be a material change or exposures.

Submission date
Final publishing date
Final answer

As clarified by the criteria in points (i) and (ii) of Annex 1, Part 1, Section 1, Point 1(c) of RTS 529/2014, 'additional exposures related to the lending decision of a third party to the group' indicates any exposures not originated by the institution itself. The wording 'to the group' clarifies that the third party does not belong to the same group of the institution, while the additional exposures are now exposures of the group to which the institution belongs.
This would be the case, for example, of a bank acquiring a portfolio of exposures from another institution or of an institution outsourcing parts of the credit process (including the underwriting) in relation to a portfolio of exposures which is in the balance sheet of the institution.

 

Status
Final Q&A
Answer prepared by
Answer prepared by the EBA.
Note to Q&A

Update 26.03.2021: This Q&A has been reviewed in the light of the changes introduced to Regulation (EU) No 575/2013 (CRR) and continues to be relevant.

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